TradeWinds for June 27th

The only good thing to say about last week, is that it will be hard to get any worse in the weeks ahead.

We have been down four straight weeks and the market is just aching for a oversold bounce. Its started on Thursday and actually continued a bit on Friday.  Although the headlines all focused on the Dow taking another 100+ point hit, the broader market held up pretty well and of the the 85 equities we track, 45 were gainers. Of course, none of that is much to get excited about. Our momentum indicators continue to put us in stormy waters.

We will be watching next week for some evidence that the market wants to put in a bottom in this range. We are also keeping a close eye on oil. Our momentum indicators are telling us the is a divergence that could lead to a correction. In other words, oil (USO) is making new highs while the momentum indicators are weakening and not setting new highs. If we can get some sustained downside momentum going on oil without some political event stirring it up, it could have a see saw effect and fling Miss Market into the air.

Our TradeWinds Black Box had another great week despite the crashing market. We had eight tradeable wins and 4 losses. We outpaced our benchmark SPY, 2.28% to -3.3%. Come to our site and check out this weeks BlackBox picks and Top 25 lists.

TradeWinds for June 26th

It was laundry day for Miss Market, and everything got washed out. For the bull in us lets hope that the last excess of optimism has been wrung out of the market laundry and we can call this a bottom some day.

Miss Market did check the pockets of the laundry for gold, silver and oil before she put everything else through the wringer.

If you are a short trader, go for it, otherwise sit back and watch how the market reacts from here. Our momentum indicators will tell you when things are getting better. And actually the indicators didn't get that clobbered and our moderate momentum actually eeked out a gain based on residual momentum from yesterday. So once again the market is grossly oversold, but when that will make a difference we have yet to see.

Now if you look back at yesterday's post, you will see that I noted the curious behavior of the financial stocks yesterday. They started the day real strong and held their own after the Fed announcement and started to rally again. Then they just collapsed like the air going out of a balloon. First thing this morning we found out why when Goldman Sachs released their market notes on financial stocks, Citicorp in particular, which was one of the catalyst for the market wash out today. Now its obvious to me that sometime yesterday afternoon some big money players found out about the Goldman Sachs report and started dumping big time - maybe Goldman themselves.  No one ever investigates this stuff, but it so blatant. Its one reason why its so hard to make money as a small investor in the market these days.

TradeWinds for June 25th

We are finally getting the long awaited oversold bounce, but the the bigger picture is pretty much unchanged.

Our moderate and fast momentum indicators turned upward today and if we get any kind of follow through tomorrow our slow momentum indicator should do the same. We will still be struggling against some pretty bad negative TradeWinds, so it won't be much to celebrate.

I was real disappointed to see the big sell off in the financials at the end of the day after posting some nice intraday gains. Not sure what that means. Its was either trader action or a bull trap. Tomorrow should give us a better indication.  It was also weird to see the Dow collapse at the end of the day, but the techs, small caps and even OEX and SPY held up pretty good. Curious.

Just like we are getting a long side correction, I also think we are starting a correction in oil, which is long overdue. This may give a little bit of legs to the bounce we are seeing.

So that leaves us pretty much still on the sidelines, although I have liked selling some calls and even took a short position in Oil which I won't hold for more than a few days.

Happy Trading.

TradeWinds for June 23rd

The Bears sure had to love yesterday's action. Every little attempt to rally got sold off.

And now its looks like the small caps and and techs are goings to sink to catch up with the already sunk big caps. Is that a good sign for the hopeful longs?? I don't know. I do know that this market is obsessed by oil and until the fixation breaks it will control how the markets move.  I am also starting to feel that the financials are being beaten down even more because of the fear of the oil bubble bursting and another round of derivative speculation coming down on their collective heads. I have no evidence of that, only my gut.

There is nothing to be excited about in our momentum charts unless you are a Bear. I keep wondering when we are going to get the oversold bounce......

I do know that our Tradewinds Black Box continues to generate some real nice short term trading plays. Yesterday the Box generated 9 winners out of 12 picks, with three of them returning over 4% each yesterday. But nobody is watching so I will just keep these to myself.

TradeWinds for June 20th

We are down to only one argument for the long side of the market and that is it is very over sold at this point. That is not much to go on.

If you are short side investor, the market is playing to your hand right now, particularly in the big caps. The mid and small caps along with some techs are hanging tough although sliding into neutral TradeWinds and heading into negative waters.

I am not much good at short investing as I have found you have to be pretty nimble. For example, financials may look to be fertile territory for a short investor, but they may have just been washed out an at a bottom, so I would stay away from that. The same goes for energy and the long side. I got to believe oil is about to correct, but one headline can change that.

All that said is that it probably a good time to just sit on the sidelines and watch, or do as I will probably do and sell some calls and make a little cash while I wait to see what the market is going to do this summer.

Check out our Top 25 lists and TradeWinds Black Box for some investing ideas on both the long and short side. Our Black Box was a perfect 5-0 last week for picking stocks that made a tradeable move.

TradeWinds for June 19th

Even with all the major indexes moving up today, we still see a split market between the Big Cap indexes and everything else.

The DIA was up .25%, while IWM was up .83% and QQQQ was up 1.56%.  While our Slow Momentum indicator remains in turbulent negative TradeWind waters, under the covers you will find that the small caps and tech stocks are in neutral TradeWinds.

All of our momentum indicators a going flat line, so its kinda hard to predict what is going to happen next. Tomorrow is option expiration day, which can always lead to all sorts of extremes (although sometimes it is just a blah day).  I still sense that the general feeling of the market is that its oversold and resisting any further down moves. If sentiment changes on the big caps, we could see a great leap to the long side.

Looking at the sectors oil and energy are leaders, but there is weakening, so I think there is a correction about to set in there. Agriculture remains strong and biotech is making a stealth surge. Midcaps and small cap are in the neutral category but showing signs of strong base formation, so I would watch them for a thrust to long side during the summer.  Precious metals are also hanging tough in the neutral TradeWinds and even showing some strength of late, I am not convinced if that is just the doom and gloomers keeping it afloat or if there is something more to the move, but its worth keeping an eye on.

Let me add this final editorial comment. I believe that the election in November is going to be one of those times in our history when there is a dramatic shift in the body politic and general thinking of the country. Call it the tipping point theory or whatever, but I think we will find that 2008 goes down with 1860, 1932, 1960 and 1980 as elections that truly shifted the direction of the country. Miss Market is also aware that there is going to be a new man on the block and is trying to position herself for what he will bring.

I you haven't guessed, I do believe that Barrack Obama will be the next President.  The mega big caps are probably not the place to be given that outcome - particularly mega energy companies. Entrepreneurial, innovative small cap companies probably will be in favor, particularly in alternative energy areas. Mega healthcare is probably not a good investment, but again, innovative health technologies or services will be - which could explain the positive movement of the biotechs as of late. 

It should be an interesting six months for politics and investing.

TradeWinds for June 18th

Its pretty hard to make a case for the long side of things right now. If you are long inclined, there are a couple of silver linings to the dark cloud.

Today's action moved our Slow Momentum indicator to the downside after a couple of flat days. Its not a decisive move but discouraging nonetheless. Moderate and Fast momentum still showed long side gains, although weakening. Since we are still sailing in negative TradeWinds and nearly have of our 40 sectors and indexes are negative as well, you have to believe that short is the way to go. I am a die hard long trader so I look for those silver linings and I think you find them if you look at the 6 month charts of the major indexes. Right now, only the DIA and OEX are really looking ugly with the December and March lows looking like they may be in play. Look at QQQQ, IWM, MDY and even SPY and its not that bad. It looks like just a minor correction after the big run off the March lows. While the DIA is off 7.7% from its recovery high off the March low, MDY is down only 3.6%, QQQQ down 5.5% and IWM down 4%. SPY is the worst of this bunch, but looks like its in a good support spot.

This tells me that its the big caps that have been suffering and the broader market still is basically healthy. How long this divergence will hold is another story, but it does mean it not quite time yet to throw in the towel for the Bulls, although caution is certainly the key word, along with staying away from the big caps.

TradeWinds for June 17th

The action this afternoon was not to our liking, but in the end did not do immediate damage to our recovering momentum indicators.

After a couple of nice up days after the Thursday low, its not surprising to see a down day. The techs stood in there pretty good and overall we are still seeing recovery in our indicators and across many of the stocks and ETFs we follow. In fact we saw more strength "under the covers" than we saw reflected in the indexes, so that is a good thing.

Caution is still the overall strategy as our Slow Momentum is still struggling in negative TradeWinds even though it is leveling out. One good day puts us back to neutral, but one bad day ......

Meantime if you have been checking our TradeWinds Top 25 lists and TradeWinds Black Box you are missing out on some mighty fine trade calling.  The Black Box this week is currently is a perfect 5 for 5, and over the last four weeks we are 24 - 8 in picking long side tradable stocks in our Black Box.

TradeWinds for June 13th

We got the bounce and hold that we were looking for in Friday's action. Now we want to see some follow through at the first of the new week.

Friday gave us some encouragement with a strong day and most importantly a strong finish going into the weekend. This had the affect of turning our Fast Momentum indicator to the upside and moderating the down slope of the Moderate and Slow momentum indicators. Since we are way oversold on both the moderate and fast momentum indicators, we could see a nice bounce if we get some follow through long side action.

We had a lot of eroding of our sectors during the week, leaving us with only 8 sectors still in positive TradeWind waters, 14 in neutral and 18 in stormy negative TradeWind waters. So while we are seeing signs of some short term strength, don't get too excited or let you money sit for too long in a long side play because this background strength is still iffy.

Happy Trading

TradeWinds Special Post

As we enter the final three hours of trading for the week, we here at TradeWinds think its going to be a crucial period and we are optimistic.

First, its looks like, at least for the short term, the oil rally has run out of gas. We are seeing a divergence set-up for our Fisher Transform and TSI indicators that tell us the USO has hit a near term peak and will be headed down. Watch the trading action for the rest of the day and if it stays down going into the weekend, you can think of taking a short position next week. This would be a take-the-profits-quickly position because of how oil is tied into the political world. Also don't open that position today - you don't want to wake up Monday morning to see that the US has bombed Iran.

We also like the way the small caps have held in there pretty good through this down draft, a bit better than the big boys. This means folks are still willing to take a bit of risk in the market. Watch the afternoon action closely. If we finish strongly along with oil down, it will be a cause for optimism going into the weekend.

Watch for our weekend update to recap the week and look ahead to the next.

TradeWinds for June 12th

That sinking feeling continued for our momentum indicators, but there are signs that we are nearing at least the short term bottom of this down draft.

Our Slow Momentum Indicator is just barely hanging on to Neutral waters, and barring a huge rally today will like fall into the red after today. The big question now is how long we will remain in the turbulent waters.  We see that our Fast Momentum indicator almost flattened out yesterday and if the pre-market rally holds it will turn up at the end of today. The Moderate Momentum Indicator is WAY oversold, particularly when you look at the major indexes alone.  This all signals a short term rally.

We will watch closely if this downdraft was just a correction of the bull move off the March lows to the May high, or the end of the correction of the bear move from the October highs to the March low. For the bull argument, I am watching for a day when we hold a rally and end near the days highs.

Once again, if you want to play the long side, be a quick hitter until the new trend is clear.

TradeWinds for June 11th

I will be updating the momentum indicators and Top 25 Lists later on today. The commentary to give on those updates is pretty clear before running the numbers.

You have been watching the markets, probably with anxiety if you are on the long side. While there was some indications late last week that the long side would take control again, it succumbed to the surging oil prices. There has been attempts to rally or hold a support levels, but they have been weak. As a consequence, our momentum indicators have run into choppy waters. Its not quite yet stormy, but pretty darn close.

You psychology should now be shifting to being on the sidelines, or going to the short side. If you insist on playing the long side, then do so with the guerilla mentality of striking quickly and getting out quickly. Right now the only sector that has some real momentum going to the long side is the agriculture sector. The oil/energy sector scares me a bit because of its frothiness.

Time to be careful

TradeWinds for June 6th

Okay, I was thinking I was pretty smart when the market zoomed on Friday. I expected a down day on Friday but not what we saw. When I said that this market could move 200 points either way, I really didn't expect what we saw. So where do we go from here?

Our momentum indicators have been damaged with the long or slow momentum falling into the neutral TradeWinds zone. Our moderate and fast momentum indicators turned down but are also in oversold territory. My thinking is that Friday was clearly an excessive reaction to the idea that Israel would attack Iran and the unemployment report, which logically should have been greeted with favor. But mania has taken over the oil market and so long as that has a grip, then its going to be hard to make much long headway on the market in general.

Sit on the sidelines and make plans to go either short or long depending on how things shake out over the next few days is the best advice I can give at this point.

Check out our Top 25 Lists and TradeWinds Black Box for some trading ideas, if you want.

TradeWinds Special Report

Miss Market is just about the most confounding, fickle creature that there is. After yesterday's explosive rally, we get the dreaded countermove that wipes out all of the gains. What is doubly confounding is the headline reasons for the tank.

Unemployment rate surges to 5.5%, highest since 1975; give up any hope of an interest rate hike. That is some of the headlines I have seen. What this, Miss Market goes into a swoon because rates won't go up??? All year long she was just begging for more and more rate cuts. How can we ever please her????

And lets take a closer look at those unemployment numbers. The economists out there said the economy was expected to shed 60,000 jobs this month, but guess what, it only shed 49,000 jobs. Wow, a surprise to the upside, we should be happy that the economy is not losing jobs as fast as feared, right?? But no, no one talks about that, they all focus on the unemployment rate. The unemployment jumped because a bunch of teenagers joined the work force - duh, doesn't everyone know that happens at this time of year. So what is the big surprise in these number?? Where is the bad story for the economy??

I got to figure that there will be a little bit of recovery later in the day as some bargain hunters and buyers from yesterday come to their senses. Overall, this will put us back on the fence watching to see which way the mercurial Miss Market is going to go.

TradeWinds for June 5th

Miss Market finally showed her hand today and right in line with what we have been saying the last couple of days. Yesterday we said this "... this market feels like any day could explode upwards or implode to the bear side. Its a little harder to make the case for bear side when the small and mid caps, along with the techs are hanging tough." And on Tuesday we said this "I think the odds are just as good that we will see a +200 day tomorrow as we might see a -200 day. If you are a gambler, then place your bet on red or black. I will be watching. Basically what I am saying is that we may be at a pivot point as early as tomorrow that either re-ignites our long move or shifts the market into a summer bear move." Pretty right on stuff, I bet some of your are paying for advice that is not as good as this.

Enough of the self-promotion. We were at a pivot point and Miss Market said lets keep going to the long side. That is pretty much the story. We don't try to come up with some wise acre explanation of why the market did this or that, because we know that is just the product of headline writers. We are trying to give some sound information for following the trends of the market.

As with all things with the market we don't celebrate and throw all our money in blindly. It looks good today, but tomorrow is another day. We should expect a little consolidation and then a steady move forward if the trend to the long side has indeed be re-established. We have seen it happen were a +200 day is followed by a -200. Our momentum indicators don't suggest that, but if it happens, we will be back to scratching our head.

So take a look at our Top 25 lists and TradeWinds BlackBox results and begin making you own planning for getting in on the long side.

TradeWinds for June 4th

Miss Market is working the room, looking for someone to take to the dance. Right now she has a fancy for the small caps, mid caps and those dynamic techs. She is shunning the big boys and those financial guys.

I am still befuddled by this bifurcated market, and true to our name I will not ask why. When the trend is not clear, we step aside and just wait to see how things will shake out. Like I said yesterday, this market feels like any day could explode upwards or implode to the bear side. Its a little harder to make the case for bear side when the small and mid caps, along with the techs are hanging tough. You can also throw the transports, biotechs and Japan into that camp. But those big caps are just stinking up the place - the Dow and OEX are in negative TradeWinds waters and the SPY is acting like it wants to join them.

If you add it all up it suggest that we are heading into a range bound period of trading. The problem with that theory is that you usually don't see the volatility that we have had this week in a range bound market. We have been jumping around like popcorn lately.

Maybe we are validating the theory that come may we should just go away from the market. I don't buy that either because this is an election year and I think there will be a lot of maneuvering of money as we go through the year to try and be on the right side of what a new administration will bring in 2009.

So maybe there is a shift of money out of the stodgy big boys and the energy stocks and into the growth world of tech and small and mid caps. That has some sense to it, if you believe we have seen the worst of high energy prices for now. Whatever the reason is, Miss Market is not showing her hand right now, so I still say stick to the sidelines. If you must trade, I think its clear from this post what sectors you should look at.

For some additional trading ideas take a look at our latest Top 25 lists and TradeWinds Black Box.

TradeWinds for June 3rd

Oh Miss Market is back to her fickle, unpredictable ways. Which just may mean the market is ready to change its stripes.

I bet a lot of you were spending your morning much like mine. Doing your job and keeping one eye on the market, or maybe watching the market full time. You felt a little uneasy about yesterday but you knew the market had three good days last week, so you watched the morning action feeling pretty good that the market was doing some consolidating maybe even adding to your gains on some long positions. Then, boom, the bottom fell out for no real good reason that I can think of - come on, it can't be the GM sales figures. And then just when you had that feeling for the millionth time that you would never trade the market again, it catches it self and makes a decent rally off the lows - particularly for the techs and small/midcaps. At the end of the day you are puzzled and confused; go home and drink a lot.

Let's try and put some rational perspective on the day if we can. Our momentum numbers are in bad shape for the longs, no doubt about it. There is still some good news below the surface, but everything is weakening right now. We still have 21 of 40 sector/indexes in positive TradeWinds territory, but that number is shrinking. The big caps are sailing into stormy seas (DIA went negative today), while the small caps and midcaps are holding out pretty good (MDY actually posted a gain today). Techs are holding tough with buyers moving into the QQQQ for second day in a row at its support level. The background macro noise is not all that bad - some good news in home building, oil is in the throes of at least a short term correction, and while some post market headlines blamed the down day on worry over financials, they were only down a fractions for the day.

Its a mixed bag for sure, which says to me its time to sit on the sidelines until Miss Market gets out of this funk and decides what to do. I think the odds are just as good that we will see a +200 day tomorrow as we might see a -200 day. If you are a gambler, then place your bet on red or black. I will be watching. Basically what I am saying is that we may be at a pivot point as early as tomorrow that either re-ignites our long move or shifts the market into a summer bear move.

Sectorwise, the only thing that was real interesting was the continued rebound of the Ag stocks. You will see a bunch of them in our Top 25 Buy Momentum List, along with our number one stock which has appeared on the list for 12 consecutive days, APH.

TradeWinds For June 2nd

Just a short note to express being confounded once again by Miss Market.

It did not surprise me that the market was down today, after all we had a nice three day run coming into today so the odds were in favor of a down day. Just like last week, I was a bit taken aback by the strength of the down draft. We rallied nicely in the last 30 minutes or so which is always a good sign. But I want to extend some caution because the down day moved all of our momentum indicators to the downside. The Fast and Moderate momentum had not built up enough steam to fight off this big of a down move. Also, the DIA moved into negative TradeWinds territory and the SPY moved to neutral. Taken all together I just have to back off on some of my optimism from yesterday. There is still lots to like in the market, particularly in tech, small caps, and strengthening dollar, but I am getting some vibes that we may be in for at best some consolidation - i.e. going sideways, if not a bit of dip. I have misjudged Miss Market before (and will again), but I felt I needed to post this word of caution.

Just follow the TradeWinds for May 30th

Well, last week was a pretty darn good week, particularly if you were in the tech space. And the good thing is, there is no reason to not expect more to come in the coming week.

Our momentum charts are telling us that we just had a nice blowing off of the froth that built up a couple of weeks ago. The Moderate and Fast Momentum dipped hard, recharged and are moving up nicely. At the same time our slow or long term momentum never broke down and continues to sail in the nice smooth water of positive TradeWinds.

We are just a smidgen overbought on the Fast Momentum, only because we have had three strong moves in a row, but in terms of absolute numbers its not in overbought territory, nor is the Moderate Momentum. Therefore, if you are an aggressive trader, you should be buying any weakness this week - assuming there is no news that comes out to change the environment.

Sectorwise, the techs have taken on market leadership, along with small and mid caps. The Dow and OEX were notable laggards last week. Energy is still strong in absolute numbers, but showed some weakening last week, so I would keep an eye on them. Finally the precious metals rally collapsed last week, along with the Euro and bonds - so they are not on my list for now.

To get more detailed trading advice, check out our Top 25 lists and the results from last week's sizzling TradeWinds Black Box.